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DERIVATIVE FINANCIAL INSTRUMENTS
9 Months Ended
Sep. 30, 2024
Derivative Instruments and Hedging Activities Disclosure [Abstract]  
DERIVATIVE FINANCIAL INSTRUMENTS DERIVATIVE FINANCIAL INSTRUMENTS
The Company is exposed to certain risks relating to its ongoing business operations. The primary risks managed using derivative instruments are commodity price risk, currency exchange risk, and interest rate risk. Forward contracts on certain commodities are entered into to manage the price risk associated with forecasted purchases of materials used in the Company's manufacturing process. Forward contracts on certain currencies are entered into to manage forecasted cash flows in certain foreign currencies. Interest rate swaps are utilized to manage interest rate risk associated with the Company's floating rate borrowings.
The Company is exposed to credit losses in the event of non-performance by the counterparties to various financial agreements, including its commodity hedging transactions, foreign currency exchange contracts and interest rate swap agreements. Exposure to counterparty credit risk is managed by limiting counterparties to major international banks and financial institutions meeting established credit guidelines and continually monitoring their compliance with the credit guidelines. The Company does not obtain collateral or other security to support financial instruments subject to credit risk. The Company does not anticipate non-performance by its counterparties, but cannot provide assurances.
The Company recognizes all derivative instruments as either assets or liabilities at fair value on the Condensed Consolidated Balance Sheets. The Company designates commodity forward contracts as cash flow hedges of forecasted purchases of commodities, currency forward contracts as cash flow hedges of forecasted foreign currency cash flows and interest rate swaps as cash flow hedges of forecasted SOFR-based interest payments. There were no significant collateral deposits on derivative financial instruments as of September 30, 2024 or September 30, 2023.
Cash flow hedges
The effective portion of the gain or loss on the derivative is reported as a component of AOCI and reclassified into earnings in the same period or periods during which the hedged transaction affects earnings. Gains and losses on the derivative representing either hedge ineffectiveness or changes in market value of derivatives not designated as hedges are recognized in current earnings.
As of September 30, 2024 and December 31, 2023, the Company had $4.4 million and $15.1 million, respectively, net of tax, of derivative gains on closed hedge instruments in AOCI that will be realized in earnings when the hedged items impact earnings.
The Company has currency forward contracts with maturities extending through March 2027. The notional amounts expressed in terms of the dollar value of the hedged currency were as follows:
 September 30, 2024December 31, 2023
Chinese Renminbi$405.2 $302.3 
Mexican Peso295.0 101.4 
Euro573.9 465.8 
Indian Rupee36.2 30.1 
British Pound3.5 7.1 

The Company has commodity forward contracts to hedge forecasted purchases of commodities with maturities extending through December 2025. The notional amounts expressed in terms of the dollar value of the hedged item were as follows:
 September 30, 2024December 31, 2023
Copper$58.1 $37.5 
Aluminum0.3 1.4 

The Company entered into two receive variable/pay-fixed forward starting non-amortizing interest rate swaps in June 2020, with a total notional amount of $250.0 million, which were subsequently terminated in March 2022. The cash proceeds of $16.2 million received to settle the terminated swaps is being recognized as a reduction of interest expense via the effective interest rate method through July 2025 when the terminated swaps were scheduled to expire. The Company entered into two additional receive variable/pay-fixed forward starting non-amortizing interest rate swaps in May 2022, with a total notional amount of $250.0 million. These swaps will expire in March 2027.
Fair values of derivative instruments as of September 30, 2024 and December 31, 2023 were:
 September 30, 2024
 Prepaid Expenses and Other Current AssetsOther Noncurrent AssetsOther Accrued ExpensesOther Noncurrent Liabilities
Designated as Hedging Instruments:
Interest Rate Swap Contracts$— $1.8 $— $— 
Currency Contracts0.5 — 6.0 0.1 
Commodity Contracts2.3 0.4 1.6 — 
Not Designated as Hedging Instruments:
Currency Contracts2.7 — 1.2 — 
Total Derivatives$5.5 $2.2 $8.8 $0.1 
 December 31, 2023
 Prepaid Expenses and Other Current AssetsOther Noncurrent AssetsOther Accrued Expenses
Designated as Hedging Instruments:
Interest Rate Swap Contracts$— $5.3 $— 
Currency Contracts13.1 0.2 1.0 
Commodity Contracts1.0 0.1 0.6 
Not Designated as Hedging Instruments:
Currency Contracts1.3 — 5.9 
Total Derivatives$15.4 $5.6 $7.5 
Derivatives Designated as Cash Flow Hedging Instruments:

The effect of derivative instruments designated as cash flow hedges on the Condensed Consolidated Statements of Income (Loss) and Condensed Consolidated Statements of Comprehensive Income (Loss) were:
Three Months Ended
September 30, 2024September 30, 2023
Commodity ForwardsCurrency ForwardsInterest Rate SwapsTotalCommodity ForwardsCurrency ForwardsInterest Rate SwapsTotal
Gain (Loss) Recognized in Other Comprehensive Income (Loss)$1.2 $(4.9)$(7.2)$(10.9)$(0.9)$(3.7)$2.2 $(2.4)
Amounts Reclassified from Other Comprehensive Income (Loss):
Gain (Loss) Recognized in Cost of Sales0.7 5.1 — 5.8 (3.1)4.6 — 1.5 
Gain Recognized in Interest Expense— — 1.4 1.4 — — 1.6 1.6 
Nine Months Ended
September 30, 2024September 30, 2023
Commodity ForwardsCurrency ForwardsInterest Rate SwapsTotalCommodity ForwardsCurrency ForwardsInterest Rate SwapsTotal
Gain (Loss) Recognized in Other Comprehensive Income (Loss)$1.3 $(9.6)$(3.5)$(11.8)$(0.7)$21.0 $4.3 $24.6 
Amounts Reclassified from Other Comprehensive Income (Loss):
Gain (Loss) Recognized in Cost of Sales(1.1)19.8 — 18.7 (10.9)8.6 — (2.3)
Gain Recognized in Interest Expense— — 4.3 4.3 — — 4.4 4.4 
Derivatives Not Designated as Cash Flow Hedging Instruments:

The effect of derivative instruments not designated as cash flow hedges on the Condensed Consolidated Statements of Income (Loss) were:
Three Months Ended
September 30, 2024September 30, 2023
Commodity ForwardsCurrency ForwardsCommodity ForwardsCurrency Forwards
Gain recognized in Cost of Sales$— $— $0.1 $— 
(Loss) Gain recognized in Operating Expenses— (1.7)— 27.4 
Nine Months Ended
September 30, 2024September 30, 2023
Commodity ForwardsCurrency ForwardsCommodity ForwardsCurrency Forwards
Gain recognized in Cost of Sales$— $— $0.2 $— 
Gain recognized in Operating Expenses— 6.0 — 14.9 

The AOCI balance related to hedging activities consists of a $2.3 million gain net of tax as of September 30, 2024 which includes $0.6 million of net current deferred gains expected to be reclassified to the Consolidated Statement of Comprehensive
Income in the next twelve months. There were no gains or losses reclassified from AOCI to earnings based on the probability that the forecasted transaction would not occur.

The Company's commodity and currency derivative contracts are subject to master netting agreements with the respective counterparties which allow the Company to net settle transactions with a single net amount payable by one party to another party. The Company has elected to present the derivative assets and derivative liabilities on the Condensed Consolidated Balance Sheets on a gross basis as of September 30, 2024 and December 31, 2023.

The following table presents on a net basis the derivative assets and liabilities that are subject to right of offset under enforceable master netting agreements:
September 30, 2024
Gross Amounts as Presented on the Condensed Consolidated Balance SheetDerivative Contract Amounts Subject to Right of Offset Derivative Contracts as Presented on a Net Basis
Assets$7.7 $(2.0)$5.7 
Liabilities8.9 (2.0)6.9 
December 31, 2023
Gross Amounts as Presented on the Condensed Consolidated Balance SheetDerivative Contract Amounts Subject to Right of OffsetDerivative Contracts as Presented on a Net Basis
Assets$15.7 $(2.6)$13.1 
Liabilities7.5 (2.6)4.9